Non-Ferrous Metals: After-Peak Price Decrease

Jul 31st, 2017

The survey of the analysts’ opinion on the global market of nonferrous metals conducted by Reuters showed that most experts predict stabilization or a slight price decrease for aluminium, copper and zinc in the second half of the year. The shortage of supply in these markets will be small and in 2018 it will reduce more.

In the 4th quarter of the year, the average price for aluminium will be $1918 per tonne which corresponds to the current quotes on the London Metal Exchange (LME). Stephen Walker, a chief analyst of the mining industry in the Canadian company RBC Capital Markets, says it is difficult to predict the situation with aluminium as they are still unaware of how much excess facilities will be taken off-line by China.

The analysts’ estimations show that in the current year the global deficit of aluminium is only 125 thousand tonnes, and in 2018 it will be reduced to 87 thousand tonnes. This info differs from the data obtained from RUSAL, a Russian aluminium giant, which predicts the reduction by 1.3 million tonnes in 2017 and by 1.8 million tonnes in the next year.

LME will sell copper for $5950 per tonne. However, the price will also fall in the next three months and will be $5726 per tonne. The supply and demand balance for copper will be reduced due to a slight deficit of about 44 thousand tonnes caused by impaired production of copper at some companies in Chile, Indonesia and Peru. Despite this, the situation on the market begins to stabilize and in 2018 they expect the production surplus estimated at 74 thousand tonnes.

As for zinc, the average forecast for the fourth quarter is $2734 per tonne, which is below the current level of LBM. Zinc deficiency in 2108 will be 190 thousand tonnes. The zinc supply is will improve in the next six months due to the launch of new production facilities while zinc consumption, particularly in China, will decline. The drop in zinc prices depends on significant inventory that has accumulated on the LME, Chicago Mercantile Exchange and  Shanghai Futures Exchange – about 400 thousand tonnes plus 1.5 million tonnes of over-the-counter stocks.